House Speaker John Boehner of Ohio talks about an accord on the payroll tax cut negotiations during a news conference on Capitol Hill in Washington, Wednesday, Feb. 15, 2012. (AP Photo/J. Scott Applewhite)

House Speaker John Boehner of Ohio talks about an accord on the payroll tax cut negotiations during a news conference on Capitol Hill in Washington, Wednesday, Feb. 15, 2012. (AP Photo/J. Scott Applewhite)

House Speaker John Boehner of Ohio pauses while talking about an accord on the payroll tax cut negotiations, Wednesday, Feb. 15, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite) less

House Speaker John Boehner of Ohio pauses while talking about an accord on the payroll tax cut negotiations, Wednesday, Feb. 15, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/J. Scott ... more

Photo: J. Scott Applewhite

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Payroll tax deal struck

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WASHINGTON — Calling quits to a bruising election-year fight, negotiators on Capitol Hill sealed an agreement late Wednesday on legislation to renew a payroll tax cut for 160 million workers and jobless benefits for millions more.

Sen. Max Baucus, D-Mont., announced the agreement, capping a long day of wrangling over final details of the measure, which is a top priority of President Barack Obama. The announcement paved the way for votes in both House and Senate this week.

The $150 billion measure represents a tactical retreat for Republicans, who were generally unenthusiastic about the legislation but eager to move beyond the issue. With the campaign season starting, they don't want Obama and Democrats in Congress to be able to claim that the GOP was standing in the way of a middle-class tax cut.

It represented a rare burst of bipartisanship in a bitterly divided Congress.

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The legislation would continue a 2 percentage-point cut in the Social Security payroll tax, renew jobless benefits averaging about $300 a week for people languishing for long periods on unemployment rolls and protect doctors from a huge cut in their Medicare reimbursements.

The measure carries a price tag of roughly $150 billion over the coming year, partly financed by new auctions of telecommunications spectrum to wireless companies and by requiring newly hired federal workers to contribute more toward their pensions. The pension provision was watered down from a version sought by House Republicans that would have required current federal workers to contribute more to their defined benefit pensions.

Auctions of portions of the nation's airwaves to wireless companies would net another $15 billion or so — even after $7 billion is set aside to construct and run a new public safety network for emergency first responders.

Extending the payroll tax cut and renewing long-term jobless benefits were key planks in Obama's jobs program, which was announced last September but has been largely ignored since.

The measure also includes a key adjustment to the badly broken Medicare payment formula for doctors, which would otherwise impose a 27 percent cut on March 1 under a 1997 budget law.